[Briefing.com]
Wireless Facilities Inc. (WFII) 54 7/16 +1 3/4: WFII is trading up this morning on the initiation of coverage by Banc of America Securities with a Strong Buy rating and price target of $70. Wireless Facilities offers a turn-key solution to wireless network deployment as it plans, designs and manages wireless telecom networks. WFII offers its customers a vertically integrated approach to business and project development that encompasses the full range of operating, technical and financial aspects -- from initial concept to implementation and on-going management. Benefitting from the outsourcing trend in the industry as well as strong demand for wireless services and a growing need for carriers to expand and upgrade their networks, the company is putting up some impressive growth numbers. Q2 revenue came in at $59.4 mln, up 229% yoy and 37% sequentially - the company has averaged 35% sequential growth over the past four qtrs. Gross profit margin also increased to 44% vs 36% last year and 42% in the previous qtr....The company is well positioned to benefit from the migration to 3G technology as recent auctions in Europe for 3G spectrum licenses coupled with the enormous costs associated with their acquisition are driving aggressive network assessment and deployment schedules with telecom operators and equipment suppliers. While still a very small percentage of sales, the company began several 3G projects in the second qtr....Strong demand for the company's services should continue in the second half as new 3G auctions are scheduled throughout Europe and the U.S....WFII provides value to its customers as its strategy is to remain technology and vendor independent. This aligns its goals with those of its customers meaning the company has credibility and can objectively evaluate and recommend technology solutions...The company has completed projects for more than 100 customers, ranging in scope from the installation of a single cell site to multi-year, large-scale deployment contracts....Margins should continue to remain strong as on a recent conference call, management said pricing is on new contracts is trending upward....On a valuation basis, the company looks a bit pricey, but not outrageously expensive (p/e's of 82x this year and 64x next year, p/s = 13.6x, PEG = 2.21x). The stock has been trending down since the Q2 release, but certainly keep it on the radar screen as there is little argument that the wireless rollout over the next few years will be tremendous. WFII's services will be in strong demand to assist companies in the buildout. |
